Interactive broker as personal "bank"

[express]

Hi,

I know it is not a bank but I regularly have to hold big amounts in main currencies, and have to do currency change
I have revolut with premium abonment, rates are already very good (saves 500€ on 100000€ change compared to non-premium or TW for instance), but I don't trust them that much to store 200k€...
IB currency change is even better!
Being in Europe, IB funds are in UK? There are some brokers (Lynx for instance) that use your IB account with a local management.
How safe would you say they are to keep my money? Using them as "bank account" will not be an issue? I do some stock trades but this is symbolic...

 

[JustAnotherNomad]

It has been discussed several times before, use the search function or Google with “site: offshorecorptalk.com” (which will only show search results from the forum).
If I remember correctly, the bottom line was that the risk is relatively low, but not zero.

 

[Fajosst]

Swissquote, Saxo Bank and Dukascopy are also valid options...if anyone knows other alternatives, I would like to know about them.

 

[Mr Magoo]

just watch out not to hold more than 100K EUR with IB USA because amounts > 100K EUR generate negative interest. And EUR balances are not insured via FDIC. USD balances are insured and can be spread over different banks in 250 K tranches.

 

[express]

Thank you for these answers
When it comes to insurance, I know the rules (in UK FSCS apply, equivalent of FDIC, but till 85000£)
I was talking about IB UK
I'm not sure whether Saxo allows holding several currencies no multicurrency account) ?and performing direct change, or only buy/sell pairs but at the end you hold € when closing positions?

Edit : found fees regarding exchanging between sub-accounts on Saxo bank, that's very expensive, these rates (depending on account) add to spread. Means Saxo takes 750€ when you try to just buy EUR/USD and close

Account transfers

0.75%

0.60%

0.45%

 

[jackfrost]

just watch out not to hold more than 100K EUR with IB USA because amounts > 100K EUR generate negative interest. And EUR balances are not insured via FDIC. USD balances are insured and can be spread over different banks in 250 K tranches.

Are you sure about only USD balances being insured? EUR balances should also be insured via SIPC? Information Regarding SIPC Coverage | IB Knowledge Base (apart from negative interest on EUR > 100k issue)

IB also wrote me (i specifically asked about eur and usd cash balances) that indeed that in your regular account all cash balances are insured via SIPC which would be $250k + sweep program available.

Only in your F ending account (you get two accounts as a European client, regular account number + same account number with an F at the end) are they insured via UK regulations at 85k GBP.

Maybe @Martin Everson can chime in

 

[Mr Magoo]

ok, didnt know about SIPC to be honest. Good to know. I maintain EUR and USD balances.

 

[jackfrost]

"Being IB an US based broker, all accounts are covered by SIPC. You can get further information from our website LINK../2012
Nevertheless, UK regulated accounts (those ending in F) are regulated under the UK law: Please refer to this link LINK../2012 "

They also wrote that the same applies for the corporate accounts.

 

[jackfrost]

I asked them specifically about my account numbers again to be sure. Will update.

 

[Martin Everson]

There is IB UK, IB Luxembourg, IB HK, IB US etc which are all distinct entities with different levels of coverage. Since I closed my friends and family IB account I don't have the visibility over what is going on and where your money is actually held in 2020.

You need to be super careful with IB as which IB entity you are with determines deposit safety amount.

IB also wrote me (i specifically asked about eur and usd cash balances) that indeed that in your regular account all cash balances are insured via SIPC which would be $250k + sweep program available.

Only in your F ending account (you get two accounts as a European client, regular account number + same account number with an F at the end) are they insured via UK regulations at 85k GBP.

Maybe @Martin Everson can chime in

You need to verify this with them for your "specific" IB entity. Last time I used them I had IB UK and it was £85k and thats it. I don't deal in dollars but it makes no sense to me why they would offer SIPC to any entity other than the US one. I would get them to send you a link to where it specifically says this in their terms and conditions for your entity. Don't rely on some written email response from some minimum wage support centre staff.

 

[jackfrost]

So currently if you open a European standard low life retail account it will be IB UK Ltd and you are getting two accounts actually depending on what trading permissions you request. The second account ends with an F. According to their support the regular main account is actually held with IB US LLC and the F ending account for trading UK security is ending with F (same account number). I can login and switch between those accounts. I was awarded the F account when i clicked myself through the trading permissions and enabled UK stuff.

My main account and where my funds are right now - are in the regular NON-F account. The F account is 0 as i would have to fund that seperately. It is listed as a sub account so i could use IBs internal transfer to transfer assets there.

Either way i was suprised by apparently being covered by SIPC too. The reason i asked them was actually not this forum but i read about this on numerous other sites that actually you are covered by SIPC even as a EU client making business with IB UK. I dont fully understand that AND DOUBT THAT FOR THE MOMENT but i have specifically asked them again to verify with my account numbers and cash balances which account is being held where and insured under which scheme to which amount.

I will update as soon as i get a reply as well as also call them to verify again if there is any strange wording in their reply etc and dig further.

To be honest i kind of have the feeling their support just screwed up and doesnt really understand it themselves but we will see.

PS: IB LU was marketed by them as their new entitity where they would transfer clients over in case of brexit going a shitty direction.

Interactive Brokers just confirmed that the non F account is indeed held / regulated by IB US LLC and its cash (EUR) is covered by SIPC and the F ending accounts are held / regulated by IB UK Ltd and would be subject to FCA / FSCS.

 

[jackfrost]

forum merged my earlier reply: Interactive Brokers just confirmed that the non F account is indeed held / regulated by IB US LLC and its cash (EUR) is covered by SIPC and the F ending accounts are held / regulated by IB UK Ltd and would be subject to FCA / FSCS.

 

[reesek]

IB started closing some high risk accounts recently. Just give 1 month warning and thats it.

 

[Tax Cow]

IB started closing some high risk accounts recently. Just give 1 month warning and thats it.

From what I understand, you work with wealthy individuals and you're being informed en-masse by your clients that IB closed their account?

Could you please elaborate what common characteristics you see? As you mentioned "high risk accounts" I'm assuming that banana residencies in Africa and taco residencies in Latam are the concern. Or is it about smth else?

 

[JohnLocke]

Interesting developement. I would like to ask the same, what are the characteristics you see?

 

[GiGoGo]

I have revolut with premium abonment,

May I ask how you managed to get that rebate?

Thanks in advance

 

[express]

After some tests with them, I have been facing very unpleasant things like:
-Horrible software, security biased (sends a notification on smartphone to ask validation of big withdrawal -150000€ : this notification actually contains no message, you just click because you know you have to, but if any other hackers does the operation from his computer, you will also touch notification without doubting anything wrong...
-Horrible costumer service : withdrawal was frozen with 5 days without answer after transmission of documents required...
-then this transfer was denied, because in the meantime they took fees on account (everyweek it seems...)
-completly dark fees : I had to guess they take something like 1.5% py on € cash balance... Easy... Also 20€/ month if you don't spend enough

At the end, I get same currency rates than Revolut Premium, plus much more issues...

 

[express]

May I ask how you managed to get that rebate?

Thanks in advance

Premium is 85€/year then monthly payment after 1st year. This is compensated after only 1 currency exchange of 17000€ to $ for instance
85€ represents the transferwise rate 0,5% extra fees if I calculate well

 

[jackfrost]

IB does indeed now crack down on EMIs harder. If you have funded your IB through an EMI and plan to withdraw to one because your company does not have a real bank account you should do so now and be prepared to put pressure on compliance.

They are not accepting withdrawals to Revolut / Transferwise anymore in general now. This will further be complicated that both transferwise and now also revolut changed their IBANs to new countries. Revolut Business is in the process of doing so because of brexit. So you will have to verify a new withdrawal account and IB will deny that account.

I got lucky and was able to completely empty the account to its original Revolut Business funding account now after going through 4 compliane calls and reaching one agent which did not know about Revolut.

Either way: withdraw if you dont have another real bank license account or be prepared for a surprise on withdrawals.

 

[express]

I rather trust Revolut than IB...
It's a pity that Revolut decides to center its activity to EU (migrating to Lituania?) ,now any European court decision can seize your assets on Revolut, which is not possible with GB bank ..